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Tuesday, November 14, 2017

Opinion: Significant Deepening of Cooperation Within Brics

By Hardin Ratshisusu

This year, Brasilia will bring together the heads of competition authorities within Brics as Brazil’s Administrative Council for Economic Defence, the equivalent of our Competition Commission, hosts the 5th Brics International Competition Conference.

When South Africa hosted the 4th conference in Durban in November 2015, the focus was on the role of competition policy in promoting inclusive growth in our economies. Since then Brics competition authorities have made significant progress through practical co-operation on investigations and general research.

Under the theme, Towards a Successful Second Decade of Co-operation, the conference agenda this year aptly focuses on deepening co-operation in merger regulation, approaches to the 4th industrial revolution and broad competition policy developments within Brics. Competition policy and enforcement takes centre stage within Brics as it is regarded as an integral tool for growth and development.

At the 9th Brics Summit held this year in Xiamen China, the Xiamen Declaration of the leaders of the Brics nations recognised “the importance of competition protection to ensure the efficient social and economic development of our countries, to stimulate innovative processes and to provide quality products to our consumers.”

The Xiamen Declaration further noted “the significance of the interaction between the competition authorities of our countries, in particular, in identifying and suppressing restrictive business practices that are of a trans-boundary nature.”

Central tenet

Co-operation among Brics competition authorities is a central tenet premised on the understanding that competition policy and regulation is essential in seeking to achieve common goals such as less concentrated markets, competitive rivalry in which firms freely enter or exit markets, innovative firms and inclusive growth.

Following the signing of a memorandum of understanding in 2016 by the heads of Brics competition authorities, the commission participates in various working groups in important sectors including pharmaceuticals, automotive and food value chains alongside its Brics partners. Some significant work programmes from these working groups are worth mentioning.

The working group on pharmaceuticals seeks to address and facilitate access to affordable healthcare.

This is a priority in developing nations, particularly as these nations are likely to be net importers of originator medicines which are protected by intellectual property. This invariably raises the cost of healthcare which has a domino effect across the entire economy.

The Brics working group on pharmaceuticals is undertaking work in relation to the global cost of essential medicines based on different disease burdens experienced by Brics nations with the view to drawing up solutions on preventing bottlenecks and ensuring that the interplay between intellectual property and competition regulation does not stifle competitive rivalry but also yields fair and affordable prices for medicines.

In the automotive markets, the commission drew lessons from the Federal Antimonopoly Service of Russia in developing a draft code of conduct to reduce barriers to entry relating to access to services and parts in the entire automotive supply chain. This draft code of conduct was recently published in the government gazette calling for comments. There is undoubtedly further scope for close co-operation with other competition authorities. South Africa is particularly affected by this conduct as the government has committed significant incentives through the Automotive Production and Development Programme to attract global carmakers to our shores.

Value chains

The conference will also see the launch of a study into global food value chains which will encompass work relating to genetics, animal feed, seeds, technology and innovation and retail, all within the context of global mergers and acquisitions.

This work was conducted by various academics in Brics nations who have developed the study, mainly attached to the University College London’s Centre for Law, Economics and Society, the HSE-Skolkovo Institute of Law and Development and the University of Johannesburg’s Centre for Competition, Regulation and Economic Development.

It has become evident that Brics nations have the potential to influence the global agenda and narrative in relation to competition regulation and policy and its role in seeking to achieve developmental goals.

The response of Brics nations to issues such as global consolidation in markets relating to seeds and agro-processing has the potential to signal and drive competition policy towards a developmental agenda. Mega-mergers such as those between Dow/DuPont, ChemChina/Syngenta and Bayer/Monsanto, allow for Brics nations to consider competition within a broader but complementary context recognising that such transactions may, for instance, impact jurisdictions in Europe significantly differently than it would Brics economies.

In January 2018 South Africa will become chair of Brics and in assuming this role, the commission will play its part in promoting the competition agenda, including the need to promote approaches to competition policy and regulation which align to specific needs and demands in emerging markets such as Brics.

The commission will seek to pursue this agenda by reinforcing the need for deeper co-operation in relation to, among other goals, global competition developments and policy, investigations into cross-border anticompetitive conduct and the establishment of the Brics Competition Research Centre.

It is with great pleasure that we head to Brasilia to gain knowledge and experience as well as share developments from our jurisdiction on competition policy and regulation. Brics competition authorities are indeed deepening co-operation.

Hardin Ratshisusu is deputy commissioner, Competition Commission of South Africa